State capitalism, Leninism, and the transition to socialism
--part two:

The anarchy of production beneath the

veneer of Soviet revisionist planning

The economic soil for socialism
The contradiction between social production and private ownership
The socialization of production doesn't only refer to giant factories
Monopoly, imperialism, & socialization of production

Did the Soviet economy run like a single workshop?
The anti-revisionist critique
The ministry rules!
The ministry doesn't rule!
The anarchy of production
Hoarding, and lack of specialization
Uncompleted and slow construction--dolgostroi
Surreal figures at the ministries
The ministries don't necessarily represent overall interests either
The structure of the economy
Engels on nationalization and socialism
Mysteries of the Western economy

.

(INTRODUCTION)

. In part one of this article, I reviewed Marx and Engels's concept of the nature of communist
society, and their view of the transitional steps needed to reach such a society.(1) I briefly
contrasted Marxist socialism to other views of how to reach socialism, from introducing
communism by decree on the day after the revolution, without any transitional period, to looking
towards small-scale production and ownership of the individual means of production by each
collective and commune separately. I then dwelt in detail on Lenin's views of the economic
measures needed, after a proletarian revolution, in order to implement the Marxist idea of a
transitional period between capitalism and socialism. Much of the focus was on discussing
Lenin's views on the economic role of the state in the transition period. A report on this issue by
a former comrade, Jim, was criticized, where Jim equated such transitional measures to the same
type of exploitative economy as in the Soviet Union under Stalin or in China today.

. In part two, I return to the theoretical foundation of Marx and Engels's views, rather than
dwelling on specific transitional measures. Marx and Engels held that socialism did not spring
from some good idea about how to avoid the evils of capitalist exploitation, but was prepared by
the progress of large-scale production and the development of the class struggle. So long as
small-scale production and small enterprises predominated, the rule of the marketplace was
inevitable. But large-scale production not only prepares the material conditions to allow
socialism, but also prepares the forces that will support socialism, the modern proletariat, and
gives rise to the sharp contradictions that result in socialist revolution. They held that the
economic evolution of capitalism itself was preparing conditions for the working class to
dispossess the capitalists of their control of an economy built up by the whole population,
eliminate the private ownership of the vast productive forces of modern-day society, take over
the direction of the entire economy, and end the division of humanity into different classes of
people, some who toil and others who rule over them.

. As a transition measure to the classless society, Marx and Engels held that, after a socialist
revolution, the workers would build a revolutionary state that would take over the means of
production. But when class distinctions have finally disappeared and the population as a whole is
really running production, the state itself would wither away.

. The Marxist theory is attacked today on the grounds that the state-capitalist regimes such as
Stalinist Russia allegedly developed a full social control of production, and look what a mess
resulted in these countries. Such an attack is based, theoretically speaking, on the view that
Marxism simply calls for the state, any state, to carry out widespread nationalization. But from
the first Marxism held that nationalization alone does not necessarily mean that society as a
whole directs production. And an examination of the facts of economic life in China today or the
Stalinist Soviet Union yesterday shows that these countries had state-capitalist regimes, where
the economy is subject to the conflicting interests of the various power groups among the
capitalist ruling classes there. These regimes did not and could not eliminate private interests and
run the economy according to a social control by the working people. Thus, far from Marxism
being refuted by the experience of these countries, the basic Marxist economic and political
theses are verified by the 20th century experience of state-capitalism. The inability of a capitalist
ruling class--whether bureaucratic capitalists in a state-capitalist country or market capitalists in a
mixed economy--to eliminate the anarchy of capitalist production confirms the Marxist analysis
that fundamental change can only come from the social control of production by the working
class as a whole.

THE ECONOMIC SOIL FOR SOCIALISM

. What type of society will replace capitalism? It is common to envision socialism as having
simply the good features one would like to see in the future. There are as many different
"socialisms" of this type as there are different preferences and different theorists. Lenin pointed
out that at one time

"socialists thought that to substantiate their views it was enough to show the oppression of
the masses under the existing regime, to show the superiority of a system under which
every man would receive what he himself had produced, to show that this ideal system
harmonized with 'human nature,' with the conception of a rational and moral life, and so
forth. Marx found it impossible to content himself with such a socialism. "(2)

Lenin pointed out that Marx, instead of simply judging and condemning the present system,
analyzed the economic laws underlying the capitalist system. Instead of arguing about which
economic system harmonizes with "human nature", he showed how economic development was
undermining the basis of capitalism and creating the necessity for its transformation into
socialism. Instead of trying to invent a new utopia, with institutions cleverly devised according to
the author's idea of what's good, he looked at the type of economic system whose conditions were
being prepared for by the economic evolution of capitalism itself.

. Marx studied the various steps of the process whereby small-scale production by the guild
worker in industry or the individual peasant in agriculture was replaced by capitalist large-scale
production. He noted that the specific features of capitalism, in which it differed from previous
exploiting systems, such as that production was carried on through the cooperation of larger and
larger masses of people although the fruits of this cooperation were owned and disposed of by
only a handful of capitalists. This contradiction between the social character of production and
the private character of ownership was at the base of capitalism. It accounts for the business
cycles, the possibility of masses starving while the unsalable goods pile up in the warehouses,
etc.

. Some people wish to avoid the evils of capitalism by returning to small-scale production. In
essence, they dream of overcoming the social character of production. Marxism on the other hand
holds that the capitalist marketplace can only be overcome by a revolution that would remove the
private character of the means of production. The increasing socialization of production, rather
than being the enemy, points the way forward--to the need to socialize ownership.

The contradiction between social productionand private ownership

. Thus the contradiction between social production and private ownership is key to the Marxist
critique of capitalism. Engels described the development of this contradiction as follows:

. "In commodity production as it had developed in the Middle Ages, the question could
never arise of who should be the owner of the product of labor. The individual producer
had produced it, as a rule from raw material which belonged to him and was often
produced by himself, with his own instruments of labor, and by his own manual labor or
that of his family.... His ownership of the product was therefore based upon his own
labor. Even where outside help was used, it was as a rule subsidiary, and in many cases
received other compensation in addition to wages; the guild apprentice and journeyman
worked less for the sake of their board and wages than to train themselves to become
master craftsmen. Then came the concentration of the means of production in large
workshops and manufactories, their transformation into means of production that were in
fact social. But the social means of production and the social products were treated as if
they were still, as they had been before, the means of production and the products of
individuals. Hitherto, the owner of the instruments of labor had appropriated the product
because it was as a rule his own product, the auxiliary labor of other persons being the
exception; now, the owner of the instruments of labor continued to appropriate the
product, although it was no longer his product, but exclusively the product of other's
labor.. ..Means of production and production itself had in essence become social. But
they were subjected to a form of appropriation which has as its presupposition private
production by individuals, with each individual owning his own product and bringing it on
the market. The mode of production is subjected to this form of appropriation, although it
removes the presuppositions on which the latter was based. In this contradiction, which
gives the new mode of production its capitalist character, the whole conflict of today is
already present in germ. The more the new mode of production gained the ascendancy ... , the more glaring necessarily became the incompatibility of social production with
capitalist appropriation. "(3)

. Marx described this contradiction in Capital as follows:

. "The capitalist mode of appropriation, the result of the capitalist mode of production,
produces capitalist private property. This is the first negation of individual private
property, as founded on the labor of the proprietor. But capitalist production begets, with
the inexorability of a law of Nature, its own negation. It is the negation of the negation.
This does not re-establish private property for the producer, but gives him individual
property based on the acquisitions of the capitalist era: i.e. , on co-operation and the
possession in common of the land and of the means of production.

. "The transformation of scattered private property, arising from individual labor, into
capitalist private property, is, naturally, a process, incomparably more protracted, violent,
and difficult, than the transformation of capitalistic private property, already practically
resting on socialized production, into socialized property. In the former case, we had the
expropriation of the mass of the people by a few usurpers; in the latter, we have the
expropriation of a few usurpers by the mass of the people. "(4)

. Thus Marx and Engels held that large-scale production not only provided more goods, but also
opened a path to a social system run by all. The point wasn't to invent a new social system, but to
help usher in a system that is being prepared for by economic progress itself.

The socialization of production doesn't only refer to giant factories

. Some people have suggested that the Marxist view is outdated, and the socialization of
production is no longer proceeding, because factories aren't growing ever larger. For example, in
the last issue of the Communist Voice I discussed the views of Sarah, of the Chicago Workers'
Voice group. In essence, she presented the Marxist view of the growing socialization of
production as being supposedly "bigger is automatically better". In opposition to this, she wrote
that "the current level of technology and new developments in manufacturing techniques and
organization have brought capitalism from an era where gigantic factories ruled to an era where
merely large factories rule. " This, she believed, provided a basis to believe that "'small-scale
non-modernized farming' ... should have at least some place in socialism. "(5) I pointed out that
she confused the size of individual factories and workgroups, with whether large-scale or
small-scale production was being carried out. The modern auto factory may not be near as large
as Ford's giant River Rouge complex of the 1930s, but it is generally part of even larger auto
companies and the individual workplace is in contact through fiber optic cables or satellite links
or computer technology with an entire global network. The size of the individual workteams,
factories, etc. will grow and shrink according to technology and circumstance, but they will get
further and further away from the "small-scale non-modernized" production of the past.

. In fact, Marxism has never identified the socialization of labor as only referring to the size of
the individual workplace. That is only one aspect of the socialization of labor, which is why the
continuing progress of large-scale production and the socialization of labor cannot be judged
simply by the size of factories. A century ago, in 1894, Lenin wrote that

"The socialization of labor by capitalist production does not at all consist in people
working under one roof (that is only a small part of the process), but in the concentration
of capital being accompanied by the specialization of social labor, by a decrease in the
number of capitalists in each given branch of industry and an increase in the number of
separate branches of industry--in many separate production processes being merged into
one social production process. When, in the days of handicraft weaving, for example, the
small producers themselves spun the yarn and made it into cloth, we had a few branches of
industry (spinning and weaving were merged). But when production becomes socialized
by capitalism, the number of separate branches of industry increases: cotton spinning is
done separately and so is weaving; this very division and the concentration of production
give rise to new branches--machine building, coal mining, and so forth. In each branch of
industry, which has now become more specialized, the number of capitalists steadily
decreases. This means that the social tie between the producers becomes increasingly
stronger, the producers become welded into a single whole. The isolated small producers
each performed several operations simultaneously, and were therefore relatively
independent of each other: when, for instance, the handicraftsman himself sowed flax,
and himself spun and wove, he was almost independent of others.... The manufacturer
who produces fabrics depends on the cotton-yarn manufacturer; the latter depends on the
capitalist planter who grows cotton, on the owner of the engineering works, the coal mine,
and so on and so forth. The result is that no capitalist can get along without others....The character of the regime changes completely. When, during the regime of small,
isolated enterprises, work came to a standstill in any one of them, this affected only a few
members of society, it did not cause any general confusion, and therefore did not attract
general attention and did not provoke public interference. But when work comes to a
standstill in a large enterprise, one engaged in a highly specialized branch of industry and
therefore working almost for the whole of society and, in its turn, dependent on the whole
of society (for the sake of simplicity I take a cause where socialization has reached the
culminating point), work is bound to come to a standstill in all the other enterprises of
society.... All production processes thus merge into a single social production process;
yet each branch is conducted by a separate capitalist, it depends on him and the social
products are his private property. Is it not clear that the form of production comes into
irreconcilable contradiction with the form of appropriation? Is it not evident that the latter
must adapt itself to the former and must become social, that is, socialist?"(6)

. Today this socialization has proceeded quite far. Several years ago, an accidental fire in a single
factory in Japan producing a specialized electronic component caused quivers through the world
personal computer industry. And meanwhile, while individual factories may not be the giants
they once were, multinational corporations comprising a network of factories and corporate
centers continue to grow in size and influence. A couple of years ago, in 1994, Richard Barnet
and John Cavanagh wrote that the corporate giants of today are even larger and more influential
than they were 20 years ago:

"The emerging global order is spearheaded by a few hundred corporate giants, many of
them bigger than most sovereign nations. Ford's economy is larger than Saudi Arabia's and
Norway's. Philip Morris's annual sales exceed New Zealand's gross domestic product. The
multinational corporation of twenty years ago carried on separate operations in many
different countries and tailored its operations to local conditions. In the 1990s large
business enterprises, even some smaller ones, have the technological means and strategic
vision to burst old limits--of time, space, national boundaries, language, custom, and
ideology. "(7)

. Barnet and Cavanagh are not Marxists, sometimes pass over from description to glorification of
these giants, and have no interest in trying to prove Marxist theses correct, yet that is what their
work does. They even show how the growing socialization of capitalist enterprise has extended
to popular music, which one might have supposed immune from standardization and
monopolization due to its individualistic nature. They state that:

"Six global corporations dominate the popular-music industry, not only in the United
States but across the world. These 'six sovereign states of pop music,' as one student of the
industry puts it, supply almost every record in music stores in the United States, and 'there
is virtually no American pop singer or rock band of national stature that a major does not,
in one way or another, have a piece of. '"(8)

They list these six corporations as the American firm Warner; the German media company
Bertelsmann; the well-known Japanese firm Sony; the British defense contractor (!) and
electronics firm Thorn-EMI; the British firm Polygram (owned by the Dutch electronics firm
Philipps); and MCA (owned by the Japanese electronics firm Matsushita). A number of former
large music companies have been swallowed by these six: for example, CBS Records is now
Sony Music, and Bertelsman now owns the RCA and Arista labels.(9)

. Indeed, music provides an interesting example of monopolization. The songs are written and
produced by a multitude of individual artists and bands, and yet the industry is dominated by a
few major multinational corporations. It is common among bourgeois economists to point to the
continuing existence of a multitude of small firms and individual entrepreneurs as proof that
monopolization is not taking place or is not important. But the domination of an industry by a
handful of giant firms is not impeded in the slightest by the existence of a large number of dwarf
enterprises who cannot threaten the giants and who are dependent on the giants. Still less does
the existence of the small firms prove that the socialization of labor has been eliminated. Small
firms still exist, but they are subordinate to large corporations and the forces unleashed by the
socialization of production; their fate depends mainly on factors they cannot control.

Monopoly, imperialism, and thesocialization of production

. Engels points out that: "The contradiction between social production and capitalist
appropriation reproduces itself as the antithesis between the organization of production in the
individual factory and the anarchy of production in society as a whole. "(10) As giant firms and
monopolies developed, they sought to plan production in wider and wider spheres of the
economy. Does this eliminate the anarchy of production and thus overcome one of the chief
features of the contradiction between social production and private appropriation? As we shall
see later, Engels thought that neither joint-stock companies (the giant firms of his day) or
nationalization by a capitalist government could actually provide social direction of the economy.

. The corporations have grown considerably larger since Engels's day. Lenin who lived later and
saw the development of monopoly into imperialism, argued that the huge strides made in
capitalist planning did not eliminate the contradiction between social production and private
appropriation, but intensified it. He wrote:

. "Competition becomes transformed into monopoly. The result is immense progress in the
socialization of production. In particular, the process of technical invention and
improvement becomes socialized.

. "This is something quite different from the old free competition between manufacturers,
scattered and out of touch with one another, and producing for an unknown
market....Capitalism in its imperialist stage leads directly to the most comprehensive
socialization of production; it, so to speak, drags the capitalists, against their will and
consciousness, into some sort of a new social order, a transitional one from complete free
competition to complete socialization.

. "Production becomes social, but appropriation remains private. The social means of
production remain the private property of a few. The general framework of formally
recognized free competition remains and the yoke of a few monopolists on the rest of the
population becomes a hundred times heavier, more burdensome and intolerable. "(11)

He added that:

. "... the monopoly created in certain branches of industry increases and intensifies the
anarchy inherent in capitalist production as a whole. "(12)

DID THE SOVIET ECONOMY RUN LIKE A SINGLE WORKSHOP?

. How has this Marxist theory stood up to the test of the 20th century? One of the key questions is
evaluating the nature of the revisionist countries such as the late Soviet Union, China, Cuba, etc.
These countries have carried out extensive nationalization and claimed to be "socialist" or
"communist", and yet the working class remains oppressed. If they really are socialist, then it
looks like socialism is undesirable and Marxism is just one of many plausible theories that turned
out to be false. But if these countries are state-capitalist countries which are forced to falsify
Marxism in order to present their economies as "socialist", then Marxism turns out to be an
invaluable tool for mobilizing the working class to fight for its true interests. Moreover, a closer
look at these regimes will show that not only aren't they socialist, but their economies have some
notable features that provide a dramatic confirmation of Marxism that is more powerful for
occurring in some unexpected places.

. The main bourgeois theory equates extensive nationalization with Marxist socialism, and points
to the government ministries and "command economy" in the revisionist countries. It basically
presents that the Soviet Union was run from a single center, and this is the root of all evil. One
source puts it: "Soviet-style nationalization changes the economy into 'one big factory.'"(13)Before
showing how far from the truth this is, let's note that a variety of views accept this bourgeois
view that nationalization is socialism and present that the revisionist countries were essentially
run like a single workshop, spread across an entire country.

* The Stalinist and other fake "socialist" regimes claimed that the widespread nationalization in
their countries was equivalent to socialism. They claimed that the managers and bureaucrats can't
really be a new bourgeois class, replacing the former ones, because they don't individually own
the factories.

* Trotsky's view on this is similar to that of Stalin's. While he denounced Stalin and wanted a
change of leadership in the Soviet Union, he held that so long as the nationalized property wasn't
privatized, the Soviet Union was still a "workers' state", albeit a "degenerated workers' state".The
main Trotskyist trends still follow Trotsky's view. If a country has nationalized industry and
replaced the former owners with a new ruling class claiming to speak on behalf of the workers,
this suffices for them to regard it as at least a "degenerated" or "deformed workers' state".(14) It
doesn't matter who actually ruled these countries and whether they oppressed the workers, so
long as the factories were still nationalized and a certain rhetoric was used. Despite their
preaching against Stalinism, the Trotskyists would support the Stalinist regimes even as these
regimes committed crimes against the working people. Thus various of these groupings
supported the Soviet invasion of Afghanistan, or said in the 1980s that they would support a
Soviet invasion of Poland, or even pledged support in general to Soviet military actions. Some of
these groups still think that the Russian economy is basically socialist, because privatization
hasn't yet been completed. They may call for a "political revolution" in the Stalinist countries, but
in their terminology, this means that they don't see the need for an economic or social revolution
(since the economic base was supposedly already socialist), just a change in leadership. Some
Trotskyists groups no longer even call for a "political revolution" in certain revisionist countries.
For example, the Socialist Workers' Party glorifies today's Cuba as basically socialist, on the
same Trotskyist basis that the nationalized economy means socialism.(15)

* Another section of Trotskyist groups, that allied with the SWP of Britain, follows the trend of
Tony Cliff. They correctly call the Stalinist regimes not workers' but state-capitalist regimes, and
they do not identify socialism with nationalization. Nevertheless, Cliff's picture of the Soviet
economy, as presented in his book State Capitalism in Russia, has some striking similarities to
that of the orthodox Trotskyist trends. Although Cliff denounced the Stalinist regime in the most
extreme terms he could think of, he pictured it as having overcome commodity production and
the anarchy of production and pictured Russia as if it were simply one large workshop. He
referred to the difference in a capitalist country between the planned nature of production in a
single workshop and the blind forces that work in the economy as a whole, and wrote:

"No such distinction exists in Russia. Both individual enterprises and the economy as a
whole are subordinated to the planned regulation of production. The difference between
the division of labour within, say, a tractor factory and the division of labour between it
and the steel plant which supplies it, is a difference in degree only. The division of labor
with Russian society is in essence a species of the division of labor within a single
workshop."(16)

Continuing on to a particular example, he discussed the relations between the Soviet workers and
the enterprises where they work as follows: "In essence, the laws prevailing in the relations
between the enterprises and between the labourers and the employer-state would be no different
if Russia were one big factory managed directly from one centre, and if all the labourers received
the goods they consumed directly, in kind. "(17)

. Thus Cliff believed that the "the Russian economy is directed towards the production of use
values"(18) and that the law of value and the manifestations of production for profit only affected
Russia due to its relations with its trade and competition with other countries. After discussing
this, he wrote that: "The law of value is thus seen to be the arbiter of the Russian economic
structure as soon as it is seen in the concrete historical situation of today--the anarchic world
market. "(19) And he held that

"... the division of labor is planned. But what is it that determines the actual division
of the total labour time of Russian society? If Russia had not to compete with other
countries, this division would be absolutely arbitrary. But as it is, Stalinist decisions are
based on factors outside of control, namely the world economy, world competition. From
this point of view the Russian state is in a similar position to the owner of a single
capitalist enterprise competing with other enterprises. "(20)

* An earlier article of mine on the question of the structure of the revisionist economy was
written in part against the views of a former comrade who was in the process of abandoning
anti-revisionist Marxism-Leninism.(21) He began to denounce Marxism as disproved by the
experience of Stalinism. To do so, this person claimed that the Stalinist nationalized economy
had in fact overcome all forms of private ownership and private appropriation, and thus
implemented Marx's idea of socialism. He said that there were no "distinct asset-owning property
units" in the Soviet Union, although it is well-known that the Soviet nationalized industry was
divided into separate and distinct enterprises, each with its own legal status, which in fact own
their machinery, stockpiles, buildings etc. , maintain their own financial balances, and within
certain limits can enter into relations with each other. Thus, basically, he too presented the Soviet
economy as basically like one large workshop.(22)

* Another former comrade, Jim, whose article "Lenin's views on state capitalism--review" was
discussed in a previous issue of CV(23), claimed in discussion with me that even if the Soviet
economy didn't run like a single workshop, Cuba's did. Later he briefly visited Cuba in Jan.1993,
while apparently still maintaining this view. But the series of articles by Mark in CV shows that
Cuba has not overcome the anarchy of production, and that its economic organization is quite
similar to that of the Soviet Union.

The anti-revisionist critique

. Thus the above-mentioned views hold that the Soviet Union did basically overcome the anarchy
of production and resolve the contradiction between social production and private appropriation.
Anti-revisionist Marxism (Marxism freed of the distortions introduced by the state-capitalist
apologists) holds, to the contrary, that private appropriation remained in the Soviet Union. It
turns out this is true in two different ways:

. a) The Soviet ministries planned production in the interests of the ruling class, which was a new
bourgeoisie. Marxism has never held that nationalization necessarily means planning on behalf of
all society--it means planning on behalf of the class that controls the state. Appropriation on
behalf of a minority of bureaucrats is not social appropriation on behalf of all.

. b) Moreover, the individual and small-group interests of the members of the new revisionist
bourgeoisie(24) played a crucial role in how the revisionist economies work. The various
bureaucrats and groupings fought for their own enrichment, their own power, and their own
interests. This didn't just introduce some minor corruption or deviations that were secondary to
the planning on behalf of the government as a whole (representing the interests of the
bureaucrats, the new bourgeoisie, as a whole). On the contrary, as we shall see, these private
interests of the new bourgeoisie were responsible for major features of the revisionist economy
which cannot otherwise be understood. The revisionist economy can only be explained through
recognizing the class interests involved in it; and the class interests of the new bourgeoisie
comprise the mass of its individual interests as well as its overall interests.(25) Anarchy of
production remained in the Soviet economy and other revisionist economies, although it
manifested itself in ways different from how it would in a mainly market economy. Just as
competition between capitalists, however transformed by the existence of monopolies and state
regulation, remains a fundamental feature of the western market economies, so cloaked forms of
competition and jockeying between the members of the revisionist new bourgeoisie were key
parts of the revisionist system. They can be seen whenever the system lasted for any period of
time. This is a vivid reflection of the fact that the revisionist economy did not overcome the
contradiction between social production and private appropriation.

, Nationalized production on behalf of a new ruling elite does not abolish private
appropriation--such an abolition would require the working masses themselves learning how to
run production. It does not mean the social ownership and control of production. From the point
of view of empty generalities, which bourgeois economics is full of, nationalization and
socialization are the same--control by a single center, the state. From the point of view of
Marxism, they are not. The control of the entire economy on behalf of society as a whole can
only be achieved through the emancipation of the working class. Indeed, Marxism holds that the
state will wither away after the achievement of the full social ownership and control of
production. Marx and Engels did not live long enough to see the temporary flourishing of the
revisionist regimes, and their theory about the contradiction between social production and
private appropriation was developed decades before such regimes ever existed. They did not even
conceive of these regimes. And yet the inability of the revisionist bourgeoisie to eliminate the
anarchy of production confirms their theory and its distinction between nationalization and the
social ownership and control of production. This shows that the Marxist theory isn't simply a
description of current events, made out to look like a general theory. Instead this theory does in
fact describe general economic laws that have continued to work themselves out in situations far
removed from those existing at the time the theory was first formulated. This is a confirmation of
Marxism from an unexpected source, and is therefore all the more important and decisive.

. Now let's turn to some facts about the revisionist economies, concentrating on that of the late
Soviet Union.

The ministry rules!

. The most obvious feature of the Soviet economy was the large Moscow ministries which
controlled everything and interfered in everything, not simply directing the overall economy but
stifling the initiative of everyone else. And when one has little personal knowledge of the late
Soviet Union and of the other features of its economic life, it is tempting to reason about the
Soviet Union simply from the idea of overbloated Moscow ministries running everything. For
that matter, no matter how much information they have about the Soviet Union, many people and
political trends do reason about the Soviet economy this way. It is such a simple picture, does
reflect a bit of the truth, and is basically in accord with both the revisionist and western views of
the Soviet economy, so that it has a certain persuasive power. The idea is that the revisionist
economy was simply a "command economy" where the Moscow ministry commands and
everyone else either obeys, or pretends to obey (i. e. , slacks off). Thus everything is to be
explained by the decrees of the center, with the action of subordinates and localities simply
introducing inefficiency into the system (beyond the inefficiency that comes from inaccurate
decrees).

. The ministries certainly were an important feature of the Soviet economy. There are obvious
major differences between the bureaucratic revisionist economy and western capitalism. It is not
the point of this analysis to deny these differences. Quite the contrary, it is show how bourgeois
class interests manifest themselves in economies that are outwardly quite different. This helps
provide an understanding of what is necessary to overcome capitalism in general, and not just
this or that particular style of capitalism.

The ministry doesn't rule!

. But however important the ministries, however much they could allocate massive resources to
one sphere of the economy or starve other spheres, there were other factors in the Soviet
economy whose power the ministries never succeeded in overcoming. And there were also
apparently irrational decisions that were made over and over by the ministries and can't be
explained by any overall interest of the Soviet bourgeoisie. All these things make a mockery of
the idea that the ministries could simply do what they pleased.

The anarchy of production

. For one thing, when one looks closely at the Soviet system, one finds a swirling struggle of
manager against manager and factory against factory underneath the overall planning by the
ministries. A former comrade involved with others in an intensive study of the First Five Year
Plan in the Soviet Union (1928-1933) claimed that "... what resulted could not really be
characterized as the abolition of planlessness. It was not infrequently closer to giving new insight
into the term 'anarchy of production'. "(26) The first five-year plan specified incredibly rapid
growth, but the enterprises were often on their own in finding raw materials and supplies needed
to produce what was required. They couldn't rely on the general plan or the decisions of the
ministry, but were desperate to obtain supplies at all costs.

. In one form or another, this continued after the First Five Year Plan. It was so widely
recognized that managers openly wrote about it in the Soviet trade journals and newspapers.
They said that they had to violate the law and the planning directives in order to fulfill their
obligations under the plan. Even during the height of the bloody repression of the mid-1930s,
when economic managers were among those most vulnerable to arrest, imprisonment, or even
execution, they continued to write about how they flouted the law. One professor, David Granick,
who has studied Soviet management extensively, wrote that:

. "In actual fact, plant directors have possessed great authority. But in theory, they have
not; and so they have constantly struggled to legitimize their power. During the course of
this perennial battle, they have often felt sufficiently self-confident to ridicule publicly the
laws they were violating. Even at the height of the 1930's purges, there were some plant
directors who went out of their way to write signed articles in the national press describing
how, in their own work, they had been violating both the law and instructions from
superiors, announcing that they considered these violations to be quite proper, and stating
flatly that in the future they had every intention of continuing and even extending the
violations. "(27)

. It might be said that this shows the extreme pressure to fulfill the mandated plan. And indeed, it
was one thing to write in the Soviet press about how one moved mountains to fulfill the plan, and
another to make excuses about why the plan wasn't fulfilled.(28) However, if an enterprise
fulfilled the plan by obtaining supplies outside the plan, it thereby disrupted the planned supply
of other enterprises. If this became commonplace, which it did, then it made a mockery of the
planned flow of producer goods from one factory to another. This type of plan fulfillment
resembles the push of Western firms to make a profit no matter what the effect on other firms.
Moreover, the comparison extends even further. The payment or prestige of the Soviet manager
was just as dependent on plan fulfillment as that of the Western manager is on profitability.

. This problem was never overcome right up to the dissolution of the Soviet Union. The lack of
guaranteed supply gave rise to a special type of executive, the "expediter", whose job was to
actually obtain the raw materials and supplies that the enterprise was supposed to receive under
the plan. The "expediter" remained a part of the Soviet economy right up to the end. The
historian Alec Nove, writing in the 1980s about the Soviet economy, said that:

"... We will be repeatedly examining the causes of persistent supply shortages in
subsequent chapters. Their existence gives rise to the phenomenon of the tolkach, the
'pusher,' expediter, unofficial supply agent, who nags, begs, borrows, bribes, to ensure that
the needed supplies actually arrive. "(29)

Hoarding, and lack of specialization

. The individual enterprises and ministries were quite aware of this anarchy of production, and
took a certain account of it in their plans. Thus stocks of needed materials and equipment were
hoarded by enterprises and ministries. Instead of the economy running as single workshop, each
division of the economy sought to be as independent of the rest as possible. This went to the
point that much equipment and a good deal of supplies weren't produced in the appropriate
factory, but in makeshift arrangements in other plants. And the ministries were no better than the
factory, each ministry competing with the other.

. Such inefficient production and such hoarding throughout industry harmed the overall position
of the ruling bureaucratic bourgeoisie. It was not some sophisticated scheme by Moscow, but
occurred in direct opposition to official pious statements and repeated denunciations. It cannot be
explained on the basis of accidental requests for too many resources or mistaken plans that
simply contained wrong estimates. It was not a momentary aberration. It took place because of
the individual and small-group interests of the managers in their own plants and of the ministry
bureaucrats in their own sectors, let the devil take the rest of the economy. Moreover, since each
manager knew that others felt the same way, there was no other way to act.

. Since this is such a dramatic illustration of the way anarchy manifested itself in the revisionist
economy, I will give a long extract from Granick about it:

"... Probably the main area in which central policy has been steadily ignored for thirty
years is that of organizational autarchy, or self-sufficiency of supply. Central authorities in
Moscow are quite aware of the cost advantages to be gained through the specialization of
individual factories on particular products. Each separate industrial organization,
however, is anxious to be as self-sufficient as possible, and thus achieve independence of
its neighbors and of an often whimsical national system of allotting necessary supplies.

. "Since no ministry could be sure of getting the materials, parts, and equipment needed for
its operations, the natural tendency was for each to try to expand the coverage of its
production so as to supply its own needs. Each ministry was quite willing to pay the price
of high-cost production in order to achieve independence. Thirty years of denunciation
from Moscow, accompanied by reasoned explanations of the advantages of division of
labor, had absolutely no effect.

. "In 1951, only 47 percent of the brick production of the Soviet Union was accounted for
by the Ministry of the Industry of Construction Materials.... In 1955, 390 units of a
particular type of excavator were produced. Two thirds were produced within the
appropriate ministry, but the rest were produced elsewhere at a cost 50 to 100 per cent
greater. Of the 171 plants in 1957 which specialized in machine-tool production, only 55
were under the appropriate ministry. The other plants were organized within ministries
which used their machine tools.

. "Each ministry, in fact, seemed to act much like an independent nation engaging in
foreign trade. Each inevitably dealt with other ministries, but cautiously, jealously
safeguarding its independence....

. "What made this situation even more difficult is that each individual plant copied the
example of its ministry, and strove to become an autarchic principality within an autarchic
nation....

. "In 1957, no more than half of the nation's standard tooling, nuts and bolts, and
electrodes were produced in specialized plants. Yet it was officially recognized that the
cost of producing such items in the consuming plants was several times as great as the cost
of production in factories where economies of scale could be achieved. "(30)

. Several decades later, the same problem still existed. Writing in 1986, Nove refers to "a vast
and growing Soviet literature on the subject of the scattering of production among a very large
number of ministries and enterprises. "(31)

Uncompleted and slowconstruction--dolgostroi

. Another dramatic feature of Soviet economic problems was the growing mass of uncompleted
construction that made a mockery of one Soviet plan after another. It took ever-longer periods to
complete construction projects. This problem was continually denounced, and continually
worsened. The Russians gave it its own name: "'dolgostroi' ('long-build'), the long delays in
completing construction of all but the topmost priority projects. "(32)

. The problem was not that construction workers dawdled or refused to work. Instead, it was
pretty universally attributed to the plans containing an impossibly large number of projects. As
Nove says,

"In virtually every year since 1930 a Soviet leader has deplored what is called raspylenie
sredstv, the 'scattering' of investment resources among too many projects. Measures are
taken to prevent this, to concentrate on completing what is already started, but the
ineffectiveness of these measures is attested by the fact that they have to repeated, while
the percentage of uncompleted investments rises.... It is plainly in the interest of
sectoral and local officials to start as much as possible, and to try to divert resources to
projects of particular interest to them, and it is equally plain that the central co-ordinating
power is unable to combat this tendency effectively. As is so often the case, the centre is
able to ensure that a few key activities are given priority, but cannot cope with the task of
controlling everything. "(33)

The plan calls for investment that exceeds what the ministries know is the total of resources
available.(34)

. Meanwhile the length of time for a project extended further and further. Some Soviet
economists claimed that the plans allotted twice as long for construction as in the West, and yet
the construction took twice as long as the plan allowed. Combined with other delays, this might
result in it taking 10 to 15 years between when a project is conceived to when it is finished,
giving rise to the possibility that the machines in a new factory were obsolete on the day the plant
opened.(35)

. The overextension of resources was repeated over and over. It wasn't just a mistake in this or
that plan, but something which occurred repeatedly. Western economists often smugly claim that
this took place because the revisionists were prejudiced against the concept of calculating
"interest" on the use of capital, and hence couldn't calculate the real cost of investments.
However, the revisionist economists had debated such an interest charge, and it was in fact
introduced into various revisionist countries.(36)

. It's not clear that these charges had much of any effect on the system, and in any case, they
didn't stop "dolgostroi" in the Soviet Union, which continued to intensify. Nor is there any reason
to suppose these charges could fundamentally solve the issue, since the proposal of too many
construction projects for the available resources was already irrational under any system of
calculation whatsoever.

. "Dolgostroi" didn't spring from wrong indices used to calculate fulfillment of the plan or
inaccurate formulae in the ministries. The construction projects were profitable to the managers
and officials, and it was the pressure from the various groupings of the revisionist bourgeoisie
that stood behind the inability of the ministries to set realistic plans. The irrational construction
policy hurt the status of the Soviet bourgeoisie as a whole, undermined the economy, and
weakened the revisionist grasp on power. But the drive for individual and small-group
aggrandize among this bourgeoisie was more powerful than its worry about long-range problems.
So year after year, there was lip-service to the general problem and the trying out of one new
planning index after another, while the bulk of members of the ruling bourgeoisie continued with
business as usual.

Surreal figures at the ministries

. Indeed, there must of been something of a surrealistic aspect to much of the juggling with
indices done in the ministries when everyone knew that the figures provided them by the
enterprises were inaccurate. Soviet managers routinely sent in reports to the ministries that
overestimated the difficulties facing them and minimized the resources they had on hand. They
hoped to avoid excessive demands on them in the next state plan, and thus to be able to collect
bonuses for fulfilling or overfulfilling the state plan. The ministries knew this, and so routinely
demanded that the enterprises produce more than would seem to be possible. They hoped to soak
up the hoarded or unreported resources and to force the enterprises to work up to their potential.
As Nove puts it, the knowledge that the managers are not telling the whole truth

"helps to explain the apparently irrational behavior of planners who seem to allocate more
than there is to allocate: there must be something hidden, they reason, and pressure will
compel it to emerge. Speeches and article often refer to the need to vyyavlat'
reservy--cause reserves to appear. "(37)

. Naturally, once the manager of an enterprise knew that the ministry would set the plan on the
assumption that the figures sent in had been minimized, he had little choice but to ensure that
these figures really were minimized, or else he would end up with an unrealistic burden. And so
deception went back and forth between the enterprise and the ministry, with anarchy flourishing
under the banner of planning. The separation of the revisionist bourgeoisie from the mass of
workers, and its self-seeking actions. resulted in that the ministries were separated from full
knowledge of the enterprises.

. This resulted in a "method of planning [which] is known in Russian as po dostignutomu
urovnyu ('on the achieved basis'), which is sometimes rendered as the 'ratchet principle'. "(38) The
ministry takes last year's performance ('the achieved basis') as the base, and simply steps it up.
Production should go up from last year, waste should go down. However much the revisionists
might renounce this method and beat their breast about its prevalence, it persisted.

The ministries don't necessarily represent overall interests either

. Moreover, as we have seen, the ministries themselves looked after their own interests and not
necessarily those of the Soviet bourgeoisie as a whole. For example, they often colluded with the
enterprises in covering up failures to live up to the ministry's own plan. The ministry wanted to
look good and to report that most of the enterprises under its control fulfilled the plan. Therefore,
provided the product the ministry was responsible for was produced in sufficient quantity, it
often rearranged the plan. If one enterprise overfulfilled the plan and another fell short, the plan
might be readjusted at the last minute so that it looked like both enterprises fulfilled the plan.(39)
This practice, of course, helped undermine pressure on the enterprises to live up to the various
indices and formulae in the plan.

. So the overbloated ministries don't turn out to be what they might appear to have been at first
sight. They didn't simply enforce a unified general control over the enterprises, but shielded their
enterprises, squabbled with other ministries, and reflected the balance of power among a series of
conflicting local, regional and sectoral interests of the Soviet bourgeoisie.

. No matter what the problem in the economy, there was a proposal to solve it by changing the
incentives that the ministries offered the plants or changing the formulae that show whether the
enterprise had fulfilled the state plan. But by now it may be apparent why the juggling of indices
and formulae didn't prove an effective way for the revisionist economies to solve the most
serious problems. Whenever a problem sprung from the class relations of the Soviet or other
revisionist economy, the juggling of indices could not really solve it. The problem wasn't that
these indices weren't as sophisticated as Western market indices, but that there were underlying
class realities at stake.

. This does not mean that the Soviet ministries were unimportant. Their approval was required
for a wide variety of management decisions. They also decided where the mass of investment
went. They set the plan, and the indices that showed whether it had been fulfilled. Even if the
enterprises used an army of "expediters" to make up for the gap in supplies allocated to them by
the ministries, the enterprises were intensely concerned with the official allocations. And even if
juggling ministerial indices couldn't eliminate such problems as "dolgostroi" and the anarchy of
production, they could affect the profitability of individual enterprises and the fate of various
managers. But they couldn't turn a system based on an exploiting bureaucratic bourgeoisie and an
exploited mass into a "rational" system that works for the benefit of all. The state-capitalist
nature of the revisionist system would manifest itself no matter what indices are used.

The structure of the economy

. More could be said about the Soviet economy, such as the disproportions between industry and
agriculture and between the military and the rest of the economy, or about the factors in addition
to the ministries that determined the wages of Soviet workers, etc. But enough has been said to
show that Soviet industry did not run like one huge workshop. Soviet enterprises ran on the basis
of "khozraschet" (business accounting), in which each enterprise (or grouping of enterprises) had
separate accounts and had to make a profit. This was not just a minor matter of bookkeeping, but
affected every aspect of enterprise management and reflected the struggle of each member or
grouping of the Soviet bourgeoisie in its own interest, independent of the interests of others. The
enterprises had their own interests separate from that of the Soviet bourgeoisie as a whole, and so
did the ministries. This was not just a matter of some corrupt administrators, but was
fundamental to the overall working of the system. The fight between and among Soviet
enterprises and ministries took place in a somewhat different fashion than that of Western
businesses among themselves, but take place it did.

. Moreover, I have dealt intentionally with Soviet industry, which is state-owned. Agriculture in
the Soviet Union, and in the revisionist countries in general, represented a more complicated
picture. But if the performance of Soviet nationalized industry cannot be understood until it is
realized that it is not like one big workshop, how much more must this apply to agriculture,
where several different types of ownership and of marketing arrangements existed.

. And beyond the official spheres of the economies, most revisionist economies have important
black and grey markets. They are sometimes even institutionalized, as in the case of the Cuban
"parallel markets".

. It's not an accident that the revisionist societies could not model everything after state-run
industry, and that the black markets sprung up. It is a sign that they did not in fact achieve unified
control of the economy. Those who advocate that the Soviet economy looked like a single
workshop have to admit a series of exceptions: there is the countryside, but that supposedly is not
as important as industry; there is the black market, but that's unofficial; there's the "khozraschet"
organization of industry, but that leaves the state in ownership of the enterprises; there's the
violations of the state plan and even of the law, but that's supposedly just corruption; there's the
ministries throwing up their hands and planning on the "ratchet" principle; and on and on. The
exceptions in fact cover the whole economy, including its "commanding heights".

Engels on nationalization and socialism

. Thus the Soviet and other revisionist "command" economies didn't in fact achieve social control
of production, or even a unified control on behalf of the revisionist bourgeoisie. They certainly
aren't a model of Marxist socialism. The class reality of a country split into a ruling class and an
exploited majority prevents the social control of production. No matter how many indices are
changed, no matter how the ministries juggle the criteria of profitability, they cannot change this
reality.

. Engels had long ago pointed out that nationalization did not in itself make a bourgeois
government into a socialist one or provide social control of production. He wrote:

. "But neither the conversion into joint-stock companies nor into state property
[nationalization--JG] deprives the productive forces of their character as capital. In the
case of joint-stock companies this is obvious. And the modern state, too, is only the
organization with which bourgeois society provides itself in order to maintain the general
external conditions of the capitalist mode of production against encroachments either by
the workers or by individual capitalists. The modern state, whatever its form, is an
essentially capitalist machine; it is the state of the capitalists, the ideal collective body of
all capitalists. The more productive forces it takes over as its property, the more it
becomes the real collective body of all the capitalists, the more citizens it exploits. The
workers remain wage-earners, proletarians. The capitalist relation is not abolished; it is
rather pushed to an extreme. But at this extreme it is transformed into its opposite. State
ownership of the productive forces is not the solution of the conflict, but it contains within
itself the formal means, the key to the solution.

. "This solution can only consist in the recognition in practice of the social nature of the
modern productive forces, in bringing, therefore, the mode of production, appropriation
and exchange into accord with the social character of the means of production. "(40)

. Engels was at such pains to show that nationalization by a bourgeois government was not the
same as the social control of production that he pointed out that it did not even show the
increasingly social nature of production or the nearness to socialist revolution unless there was an
economic necessity behind the nationalization. He wrote that:

"... Many of these means of production are from the outset so colossal that, like the
railways, they exclude all other forms of capitalist exploitation [than joint-stock
companies, the giant private firms of his day--JG] At a certain stage of development ...the official representative of capitalist society, the state, is constrained to take over their
management. "(41)

He gave the examples of postal service, telegraphs and railways, but added in a footnote:

. "I say is constrained to. For it is only when the means of production or communication
have actually outgrown management by share companies, and therefore their transfer to
the state has become inevitable from an economic standpoint--it is only then than this
transfer to the state, even when carried out by the state of today, represents an economic
advance, the attainment of another preliminary step towards the taking over of all
productive forces by society itself. Recently, however, since Bismarck adopted state
ownership, a certain spurious socialism has made its appearance--her and there even
degenerating into a kind of flunkeyism-which declares that all taking over by the state,
even the Bismarckian kind, is in itself socialistic. If, however, the taking over of the
tobacco trade by the state was socialistic, Napoleon and Metternich would rank among the
founders of socialism. If the Belgian state, for quite ordinary political and financial
reasons, constructed its own main railway lines; if Bismarck, without any economic
compulsion, took over the main railway lines in Prussia, simply in order to be better able
to organise and use them for war, to train the railway officials as the government's voting
cattle, and especially to secure a new source of revenue independent of Parliamentary
votes--such actions were in no sense socialist measures, whether direct or indirect,
conscious or unconscious. Otherwise, the Royal Maritime Company, the Royal Porcelain
Manufacture, and even the regimental tailors in the army, would be socialist institutions. "

. Moreover, in letters to Kautsky, Engels used the example of Java to denounce what he called
"state socialism". He pointed out that the Dutch exploited Java through an economy consisting of
Dutch state ownership on top of primitive communistic villages of the indigenous population.(42)

. Engels held that nationalization would be one of the steps taken in the proletarian revolution
that would help the proletariat take control of the economy. But if the socialist transformation
succeeds, it meant the end of the state as well as of capitalism. The social control of production
would endure, but the state would not. He wrote:

. "The proletariat seizes the state power, and transforms the means of production in the
first instance into state property. But in so doing, it puts an end to itself as the proletariat,
it puts an end also to the state as the state. "(43)

In fact, this process of ending class antagonisms and providing true social control of production
is a lengthy process. In part one, I outlined some of the transitional measures Lenin proposed for
this process. Over and over, Lenin pointed to the need for measures that increase the actual
organizational ability of the masses and their ability to control production. This is the Marxist
measure for how far socialist transformation has proceeded.

. Nove and other bourgeois ideologists regard it as impossible for the population as a whole to
control or plan production, counterposing to it the need for an administrative apparatus. He
waxes lyrical on how the abstraction "the people" cannot perform this, much as a monarchist
would lax lyrical on how "the people" cannot decide the myriad questions of state policy.(44) For
such ideologists, any administration must resemble that in a class-divided society. And hence
their ideal society can only be some variant of capitalism, even if reformists such as the historian
Nove present an idealized form of capitalist mixed-economy as "feasible socialism". I hope to
return to the issue of whether social planning is possible, and what it would look like, at a later
date. For the purposes of this article, it suffices to note that the basic issue of Marxist socialism is
precisely social control of production, and that there can be no doubt that the revisionist countries
did not and do not have such control.

Mysteries of the Western economy

. One final objection to the view that private interests exist and determine the basic class features
in the revisionist economies should be briefly mentioned. This view identifies private ownership
or appropriation solely with the model of an individual capitalist owning his plant. In revisionist
countries, where the bureaucrats did not own the factories (at least, not until the current wave of
privatizations), where there was no stock market (again, not until recently), and where there was
rule by a revisionist bureaucracy, it is held that this cannot be state-capitalism, for where are the
capitalists?

. Much of this objection stems in essence from viewing capitalism on the model of the mid-19th
century British bourgeoisie. Monopoly-capitalism in the U. S. , Western Europe (including
Britain), and elsewhere has however progressed quite far since then. The Western bourgeoisie
contains some capitalists (like Bill Gates) who individually own their firm, or whose family owns
the firm, but it also contains large numbers of executives who do not own the firms they direct.
(Such executives may get a good deal of stock in the firm as payment for their services, but they
were not appointed on the basis of owning stock in the company, and might not have owned such
stock until they were appointed. The stock they own in various companies is important for their
status as a member of the bourgeoisie, but is not how they got their position in this or that firm. )
Indeed, the "separation of management and ownership" that is typical in most large
"publicly-owned" corporations has called forth a massive literature, and some reformists have
held that this process showed that the advanced bourgeois countries were transcending
capitalism. As well, the state bureaucracy of the market capitalist countries is related to the
private capitalist elite and overlaps with it, but is surely not identical with it. The question of who
constitutes the bourgeoisie in the West has become considerably more complex since the
mid-19th century.

. A better picture of the bourgeoisie in monopoly capitalist countries would show in embryo
many features that are more accentuated in the Soviet bourgeoisie. The revisionist bourgeoisie
has particular features compared to western bourgeoisie, but it isn't an entirely separate species.

. Marx in his work set a model of paying attention to the evolution of the forms of the
bourgeoisie. He not only studied the preliminary forms that led to the modern bourgeoisie, but he
held that this form didn't ossify and become fixed in the mid-19th century. A number of remarks
in volume III of Capital show the keen interest he had in the evolution of the giant firms of his
day, the joint-stock companies that were just appearing.

. Discussing the significance of the emergence of joint-stock companies, he referred to various
features and dramatically concludes that this is the abolition of the mid-19th century capitalism,
but within the framework of capitalism itself:

. "1) An enormous expansion of the scale of production and of enterprises, that was
impossible for individual capitals.

. "2) The capital, which in itself rests on a social mode of production and presupposes a
social concentration of means of production and labor-power, is here directly endowed
with the form of social capital (capital of directly associated individuals) as distinct from
private capital, and its undertakings assume the form of social undertakings as distinct
from private undertakings.It is the abolition of capital as private property within the
framework of capitalist production itself.

. "3) Transformation of the actually functioning capitalist into a mere manager,
administrator of other people's capital, and of the owner of capital into a mere owner, a
mere money-capital.... In stock companies the function [management] is divorced from
capital ownership, hence also labor is entirely divorced from ownership of means of
production and surplus-labor.

...........................

. "This is the abolition of the capitalist mode of production within the capitalist mode of
production itself, and hence a self-dissolving contradiction, which prima facie represents
a mere phase of transition to a new form of production. It manifests itself as such a
contradiction in its effects. It establishes a monopoly in certain spheres and thereby
requires state interference. It reproduces a new financial aristocracy, ... a whole system
of swindling and cheating by means of corporation promotion, stock issuance, and stock
speculation.It is private production without the control of private property. "(45)

. Thus Marx didn't see the growth of these large firms as merely a change in size from the old
capitalism, but as illustrating new features. He noted the dissolution of the old type of capitalism,
and the huge step towards social control of production that the larger forms of planning and
control in a big corporation represented. But he maintained that this was still capitalism itself. He
wrote that "instead of overcoming the antithesis between the character of wealth as social and as
private wealth, the stock companies merely develop it in a new form. "(46)

. Similarly, the development of bureaucratic state-capitalism regimes by the revisionists didn't
overcome the antithesis between social production and private wealth, as our analysis has shown,
but simply developed it in a new form. It provides yet more examples of the separation of
management and direct ownership, as well as of the abolition of the form of private production
within the capitalist system itself. And the history of the revisionist regimes also shows that the
class contradiction between the new bourgeois ruling classes and any independent action by the
proletariat is just as strong as that between the Western bourgeoisie and the proletariat. The study
of this new form of bourgeoisie is of importance in emancipating the proletariat from any
illusions in the revisionist bourgeoisie and from the propaganda of market capitalism that
presents the failures of state-capitalism as the failure of socialism, not capitalism.

Engels, Herr Eugen Dühring's Revolution in Science (Anti-Dühring), Part III. 'Socialism', a
third of the way into Chapter II. 'Theoretical', emphasis as in the original. International
Publishers, p. 299.(Text)

For example, Stanislaw Wellisz, The Economies of the Soviet Bloc: A Study of Decision
Making and Resource Allocation, 1964, p. 47. Wellisz distinguishes between the "Soviet-type
system" in the USSR and Eastern Europe and the system in China, Yugoslavia, etc. as well as
mixed economies such as Norway or Sweden (which he regards as "socialist", see p. 9).(Text)

The term "degenerated" is used if the Trotskyists feel that the country had at one time had a
proletarian revolution, "deformed" if it hadn't. Thus, the Trotskyists feel that a regime which had
nationalized industry could be a "workers' state" even if there hadn't even been an attempt at
socialist revolution.(Text)

Interestingly enough, after having denounced Marxism as responsible for Stalinism and
reached the point of opposing the theory of the proletarian class struggle, he then began
presenting Stalinism in a positive light. He held that it was part of a "progressive" stage of
"human social development" and something that "advance[d] the civilizations of various
peoples", although he admitted it was built "on the basis of the oppression of the majority". This
is commented on in my letter "Is revisionism progressive?" (Detroit #32, March 24, 1994) which
appeared in a debate conducted by e-mail among a network of former members and supporters of
the late Marxist-Leninist Party. Some defenders of his in Boston suggested that the implication of
all this was that the next step forward, the "next stage of social development", might be "less
glorious than socialism" and "exploit the lower mass in a more refined way", something like
"Stalin's state capitalist model". (See Boston #8, an open letter from Joe in Boston. ) (Text)

The term "small-group" interests is being used here to refer to the interests of individual
groupings of the bourgeoisie to enrich themselves, as distinct from the overall interests of the
bourgeoisie.(Text)

For that matter, the overall interests of the new bourgeoisie consist in maintaining the
political and social conditions that allow its members to pursue their own personal interests. Of
course, some members of the revisionist bureaucracy may sincerely believe in their system and
think that they are upholding the interests of the working masses, just as some capitalist
ideologists may genuinely believe that the dog-eat-dog world of the marketplace is the best
system for the people. This doesn't change the fact that the actual class-wide interests of the
bourgeoisie--whether the Western bourgeoisie or the revisionist bureaucratic bourgeoisie--consist
in maintaining a system that permits the continuation of exploitation.(Text)

From Manny's speech to the Fourth National Conference of the Marxist-Leninist Party, USA
in Fall, 1990, which appeared under the title "From the October Revolution to the first five-year
plan: Some questions of Soviet history" in the Workers' Advocate Supplement, 20 July 1991,
vol.7 #6, p. 14, col. 1. Manny, however, may have derived the conclusion that this issue showed
the importance of utilizing more sophisticated mathematical methods in planning and in
economics, rather than seeing the class basis underlying the phenomenon.(Text)

Alec Nove, The Soviet Economic System, third edition, 1986, ch. IV "Industrial Management
and Microeconomic Problems", p. 95. Professor Nove attributes this problem to the supposed
impossibility of the social planning of production as a whole, a theme which he returns to
repeatedly not just in this book but in other ones as well, whereas I attribute it to the class
structure in the Soviet economy. Bourgeois ideologists, including serious historians of a
reformist bent, such as Nove, attribute to "planning" in the abstract the specific features that flow
from state-capitalism. I hope to deal with this issue in the future.(Text)

See Gregory Grossman, "Scarce Capital and Soviet Doctrine" in Readings on the Soviet
Economy, edited by Franklyn D. Holzman, 1962, for a description of some debates. A 6% charge
on capital was introduced in the Soviet Union in 1965 (Nove, An Economic History of the USSR,
1917-1991, p. 383). Charges on capital were introduced into various other Soviet Bloc countries,
reaching Romania for example at the end of 1971 (Granick, Enterprise Guidance in Eastern
Europe/A Comparison of Four Socialist Economies, 1975, p. 50) .(Text)

Marx, Capital, vol. III, Ch. XXVII 'The Role of Credit in Capitalist Production', pp. 437-8,
emphasis added. Engels adds a note to Marx's text and discusses the developing of "new forms of
industrial enterprises ... representing the second and third degree of stock companies" and
even, in some branches of the economy, to monopoly.(Text)